Tuesday, December 13, 2011

The story so far

As events unfold on the great "phantom veto" charade, we're getting to the point where we can collect all the disparate pieces and, with a few more recent additional reports, have a fairly good stab at putting together the whole story. So here goes.

The story starts not last week, but in May 2010 when Cameron commits to refusing to agree "to the transfer of any sovereignty from Westminster to Brussels as part of any future reforms to EU institutions aimed at protecting the single currency area from economic instability".

"Britain would not be agreeing to any agreement or treaty that drew us further into supporting the euro area", he tells a press conference after meeting Merkel in Berlin, shortly after assuming the office of prime minister. He adds: "It goes without saying that any treaty, even one that just applied to the euro area, needs unanimous agreement of all 27 EU states including the UK, which of course has a veto".

Thus we see the ground laid for future action, with Cameron marking the cards of the "colleagues" with his threat of a veto.

Between then and the dying days of this November, we see the euro steadily deteriorating – and the growing conviction of the "colleagues" that economic governance is required to pull the single currency into some sort of order, and to assure its long-term future. This, on the face of it, will need amendments to the Lisbon treaty, putting us exactly in the territory where Cameron has pledged to make his last stand.

The scene is then set on the last day of November, in anticipation of the European Council of 9 December. Olli Rehn, the EU finance commissioner, declares that there are just ten days left to save the euro. "We are now entering a critical period of 10 days to complete and conclude the crisis response of the European Union", he says.

Signals by then are confused. The "colleagues" are making a pitch for a treaty amendment, apparently with the support of the British. But even at this stage, the idea of amendments to the Lisbon treaty look unrealistic, on the timescale being proposed. The procedure is too long and tortuous to provide any immediate relief.

Thus we start seeing clues that the "colleagues" are thinking about a co-ordinated intergovernmental agreement, outwith the EU treaty framework, hinted at by the Irish Examiner. This also has the merit of avoiding the automatic referendums required in some member states.

However, there is the EU to deal with. It is not so easily by-passed. Council president Herman Van Rompuy is already making his pitch, planning to define what changes might be needed to the Lisbon Treaty before the European Council on 9 December. On his leisurely timetable, he is suggesting that a further Council meeting in March could then give a mandate for limited treaty change, followed by an intergovernmental conference (IGC) to draft the amendments.

This, in retrospect, must be when the Merkozy start to firm up on alternative plans. The Van Rompuy timetable, clearly, is not to the liking of the French president and the German chancellor.

Thus, we get a series of crucial meetings, firstly Sarkozy on 1 December in Toulon, addressing 5,000 of his faithful. He talks of a "new European treaty refounding and rethinking the organization of Europe". But he opposes greater powers for the EU commission. "It is not by going down the path of more supranationality that Europe will be relaunched", he says.

Merkel is hampered by her own constitutional court. There is a limit to how much more power she can hand over to a supranational authority. Following the next day, she addresses her own parliament, rejecting the idea of a "quick fix". She tells MPs that the German constitution does not permit devolving budgets to a European institution.

Although very much in vogue, discussion about Eurobonds - multi-national issuance in which Club Med would piggyback German credit ratings - is "therefore pointless", she says. The only way to have them would be full fiscal union. Thus, we are told by Merkel herself that she is determined to create a legally-enforceable "fiscal union" for the eurozone - but, it would appear, not just yet.

There is a short interlude, where Sarkozy meets Cameron in Paris, but this is a perfunctory meeting, friendly in public but not warm. Even then there is talk of the UK being "sidelined".

The following Monday, on the week of the European Council, we then see a key meeting between Merkel and Sarkozy. Then, they evidently resolve their differences, with the detail emerging in a letter addressed to Van Pompuy the following Wednesday. This is very clearly a template for a treaty and it effectively contradicts proposals made jointly by Van Rompuy and the commission, which have been issued on the Tuesday.

The Van Rompuy proposal is – as you would expect – aimed at a full-blown EU amendment treaty. The scene is now set for conflict, not between the Merkozy and Cameron, but between Merkozy and the commission. Protocal and politics both demand they follow the path set by the commission, which neither of them want to do.

So it comes to 8 December and the heads of state are assembling for the European Council the following day. The media is already hyping this as the make-or-break "summit" - unable or unwilling to use the correct terminology. Many headlines assert that the EU leaders are gathering to agree a new treaty. This cannot be the case, but the hare is running and that is a general media expectation: the leaders are meeting to negotiate a treaty.

Now according to Cameron, the question is not whether there should be a new treaty but whether there should be a full treaty change at an EU level, or a treaty outside the EU. Cameron, under attack from his own backbenchers – and under pressure from an increasingly eurosceptic electorate – needs to put up a robust face, showing the world that he is not a Brussels poodle.

Now, an important but widely neglected detail here is that the action starts on 8 December, the Thursday evening. By tradition, there should be no formal business in the Council on the evening before. Even the dinner is supposed to be "informal". The formal, scheduled discussion does not start until the Friday. Therefore, discussions which now take place, lasting well into the night and early morning, are known technically as "on the margins".

They are, in fact, being hosted not by the Council but by the eurogroup heads, who put forward their proposals, which include changes (amendments) to the Lisbon Treaty. The 17 are thus asking for the support of the other ten, the UK included. It is here that Cameron intervenes, demanding "modest safeguards" for the City of London.

Now comes the most crucial point of the whole affair. Neither Merkel nor Sarkozy really want an EU treaty, but are obliged to pursue this line in deference to Van Rompuy and the commission. But, having decided 18 months previously to exercise his veto in such circumstances, Cameron tells the Merkozy that he will not support an EU treaty unless he gets the safeguards he is calling for.

This refusal, according to Jean-David Levitte, President Sarkozy's chief diplomatic adviser, offers just the excuse the Merkozy need to kick the EU treaty into touch, without incurring the wrath of Van Rompuy and the commission. They reject Cameron's proposal for safeguards, thus clearing the was to go down the preferred intergovernmental route.

There is, of course, no veto. This is not a formal meeting, and it requires a formal intergovernmental conference to wield a veto, with a full draft of a treaty on the table – a draft which at this stage did not exist. Thus, Cameron could not stop the "colleagues" going ahead with an IGC and producing an amendment treaty for approval, if they has so wished.

But, because it suited then, the "colleagues" chose to treat the Cameron intervention as a formal veto, even though it was not. But it was their decision not to go ahead. Cameron was just the foil, the excuse to do what they wanted to do anyway.

For Cameron, however, this proved a lucky break. Almost by accident – and certainly not though any action of his own – he is now seen as blocking an EU treaty. Quick-witted enough to exploit the development in an early morning press conference, he claims: "I effectively wielded the veto". He thus converts himself in one fell swoop from Brussels poodle to darling of the eurosceptics.

Thus, in what has all the makings of a theatrical coup, everybody walks away with something. Merkel and Sarkozy get the green light for an intergovernmental treaty, and Cameron gets to be a hero. And so, in the final analysis, with a gullible and ignorant media to endorse the legend, we see people fed what Peter Hitchens calls a "blatant fake".

Cameron will dine out on it for a while, and he may even get away with it altogether, but it is a media-driven charade and will always be so. The Prime Minister did nothing courageous or even significant in Brussels last week, says Hitchens. But of such things is history made.